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If you have difficulty answering the following questions, learn more about this topic by reading our Chart of Accounts (Explanation).
- 1.
The chart of accounts is a listing of the accounts presently having balances in the general ledger.
- 2.
Some accounting software will classify some accounts as "income" accounts, while accountants might refer to these accounts as "revenue" accounts.
- 3.
The digits of the account numbers assigned to general ledger accounts often have significance. For example, an account number beginning with a "1" might signify that the account is an asset account, a "6" might signify an operating expense, etc.
- 4. The accounts shown in the chart of accounts can be broadly classified into two categories: balance sheet accounts and
__________
income statement
accounts. - 5.
Every transaction will affect how many accounts?
- 6. In addition to the standard chart of accounts for a specific industry, you will likely want to expand and/or modify the chart of accounts to fit your business. One tool that would be helpful in determining the accounts for your company would be your company's chart.
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1. LO 2.1Which of these statements
is not one of the financial statements?
2.
LO 2.1Stakeholders are less likely to include which of the following groups?
- owners
- employees
- community leaders
- competitors
3.
LO 2.1Identify the correct components of the income statement.
- revenues, losses, expenses, and gains
- assets, liabilities, and owner’s equity
- revenues, expenses, investments by owners, distributions to owners
- assets, liabilities, and dividends
4.
LO 2.1The balance sheet lists which of the following?
- assets, liabilities, and owners’ equity
- revenues, expenses, gains, and losses
- assets, liabilities, and investments by owners
- revenues, expenses, gains, and distributions to owners
5.
LO 2.1Assume a company has a $350 credit (not cash) sale. How would the transaction appear if the business uses accrual accounting?
- $350 would show up on the balance sheet as a sale.
- $350 would show up on the income statement as a sale.
- $350 would show up on the statement of cash flows as a cash outflow.
- The transaction would not be reported because the cash was not exchanged.
6.
LO 2.1Which of the following statements is true?
- Tangible assets lack physical substance.
- Tangible assets will be consumed in a year or less.
- Tangible assets have physical substance.
- Tangible assets will be consumed in over a year.
7.
LO 2.2Owners have no personal liability under which legal business structure?
- a corporation
- a partnership
- a sole proprietorship
- There is liability in every legal business structure.
8.
LO 2.2The accounting equation is expressed as ________.
- Assets + Liabilities = Owner’s Equity
- Assets – Noncurrent Assets = Liabilities
- Assets = Liabilities + Investments by Owners
- Assets = Liabilities + Owner’s Equity
9.
LO 2.2Which of the following decreases owner’s equity?
- investments by owners
- losses
- gains
- short-term loans
10.
LO 2.2Exchanges of assets for assets have what effect on equity?
- increase equity
- no impact on equity
- decrease equity
- There is no relationship between assets and equity.
11.
LO 2.2All of the following increase owner’s equity except for which one?
- gains
- investments by owners
- revenues
- acquisitions of assets by incurring liabilities
12.
LO 2.3Which of the following is not an element of the financial statements?
- future potential sales price of inventory
- assets
- liabilities
- equity
13.
LO 2.3Which of the following is the correct order of preparing the financial statements?
- income statement, statement of cash flows, balance sheet, statement of owner’s equity
- income statement, statement of owner’s equity, balance sheet, statement of cash flows
- income statement, balance sheet, statement of owner’s equity, statement of cash flows
- income statement, balance sheet, statement of cash flows, statement of owner’s equity
14.
LO 2.3The three heading lines of financial statements typically include which of the following?
- company, statement title, time period of report
- company headquarters, statement title, name of preparer
- statement title, time period of report, name of preparer
- name of auditor, statement title, fiscal year end
15.
LO 2.3Which financial statement shows the financial performance of the company on a cash basis?
- balance sheet
- statement of owner’s equity
- statement of cash flows
- income statement
16.
LO 2.3Which financial statement shows the financial position of the company?
- balance sheet
- statement of owner’s equity
- statement of cash flows
- income statement
17.
LO 2.3Working capital is an indication of the firm’s ________.
- asset utilization
- amount of noncurrent liabilities
- liquidity
- amount of noncurrent assets